Roguelikes and roguelike-likes (Spelunky, The Binding of Isaac) tend to share a number of game design elements:

Procedurally generated worlds

Character growth by way of new abilities and powers

Permanent death

I can understand why starting with permadeath as a premise would lead you to the other ideas: if you're going to be starting over a lot, you'll want variety in your experiences. But why do the first two elements imply a permadeath approach?

Analogy time: In tennis, you need rackets, a net, and a ball. The ball is required for the first two to have any meaning, but that's the entire point. You don't go around asking why a ball needs a racket and a net, because there's plenty of games where it doesn't. A -> B does not imply B -> A.
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JimmyNov 15 '12 at 21:34

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@Jimmy (and Gregory): See my comment to Josh's answer... permadeath enhances the first two elements. Also, you can have a hack-and-slash without permadeath, but by many accounts you can't really call something a roguelike without permadeath being an element. To be clear: I'm with you on "you don't need permadeath for the first two to be meaningful", but permadeath is a core element of roguelikes because it leverages the first two elements into a different style of play.
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Justin ᚅᚔᚈᚄᚒᚔNov 15 '12 at 21:36

8 Answers
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If someone isn't going to be playing your game over and over again, but instead is going to play through once from start to end using checkpoints or free saves (like in most non-roguelikes), then why would you spend your time on implementing procedural generation for your world, instead of just making a single, static, well-balanced progression of maps?

I think the important concept is that if you're going to invest in procedural generation of your levels, then to get value from the procedurally generated levels, you really have to make someone want to play your game -- from the start of the procedurally generated content -- several times. And preferably, lots of times. Permadeath is one effective way to do that.

The Diablo games, on the other hand, accomplish this same goal by letting you start over again with your levelled-up character at a higher difficulty level, after winning. Their difficulty level scales up so that a single "playthrough" can wrap around the game several times, and so experiencing several variations of each level.

Lots of other games embed a repeatably-visitable procedurally built dungeon into a static, traditionally-created framing game (commonly an RPG of some sort. e.g.: Persona, Dark Cloud, Mystery Dungeon, etc). In this type of system, separate visits to a single dungeon generate different dungeon layouts. This also allows a single "playthrough" to wrap through your procedurally generated content several times.

These are both different game mechanics which achieve a similar net effect to permadeath, in terms of justifying the use of procedurally generated content.

Of course, permadeath makes more use of (and puts more pressure on) the procedural generation of your world than other approaches, since the user can easily wind up seeing variations on level 1 over and over and over again in close succession, if he dies and has to restart a lot. If your procedural generation of level 1 doesn't make the level unique enough to keep a player from getting bored with it after five or ten successive restarts, then maybe you should think about using a different mechanism to entice players into starting a new playthrough.

yeah I was thinking the same thing, that permadeath and procedurally generated world go hand in hand. The character growth aspect just seems like an additional mechanic layered on to make the game more interesting, but a game with permadeath needs procedurally generated levels in order to stay fresh every play, and procedurally generated levels kinda need permadeath in order to make players keep generating lots of levels.
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jhockingNov 15 '12 at 21:50

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Perma-death only aids procedural generation if the player dies a lot. So you also need to add the gameplay element "kill the player though no fault of their own. A lot." Which is also a common element of Roguealikes.
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Nicol BolasNov 17 '12 at 7:05

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@NicolBolas I think there's a little personal bias showing in the phrasing of that comment. ;) But it's true that permadeath doesn't have a lot of effect if the game is easy enough that the player is never actually in peril.
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Trevor PowellNov 17 '12 at 8:06

I don't think character growth or procedural world generation imply permanent death at all. In fact, there isn't a necessarily mechanical connection between any of those three elements (as evidenced by the fact that combinations of a subset of those elements in games exist).

I simply think that roguelikes have a tendency to include those design components because the original Rogue employed them, as did its early offshoots, and thus it became a trend.

In other words, to answer the title of your question as well, permadeath is "essential" only in that it is traditional.

+1. I'd add that Roguelikes emulate Rogue because it was a formula for success. Procedurally-generated worlds and character growth are good mechanics in and of themselves, but adding permadeath simultaneously 1. gives the player more "investment" in the character (by gravely punishing mistakes) and 2. encourages the player to try different approaches when they (inevitably) fail. "Welp, that dual-wielding pyromancer with alchemy didn't work, how about a crossbow-focused ranger with imbued arrows?"
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Justin ᚅᚔᚈᚄᚒᚔNov 15 '12 at 21:31

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Those are really good points, actually -- you should expand on them in an answer of your own.
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Josh Petrie♦Nov 15 '12 at 21:35

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I'd expand on the fact that the original Rogue employed permadeath, and mention that pretty much every old game used permadeath - because saving your progress in a complex game is a relatively new invention.
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KylotanNov 16 '12 at 8:52

@Kylotan Rogue appears to have added the ability to save the game somewhere between 1980 and 1984. It wasn't there in the original release, but was there by the time of the port to various non-UNIX architectures. Just to put a little context on what "relatively new invention" means. :)
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Trevor PowellNov 17 '12 at 8:21

True, but not exactly what I meant. Hardly anybody was gaming on Unix machines in the 80s! You had to wait until about 1990 before the typical gamer had access to a combination of games with a save facility and media that made it practical.
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KylotanNov 19 '12 at 10:31

Permadeath gives character building and world exploring decisions weight.

Permadeath makes it harder to abuse the random number generator (grinding).

These things help stop a roguelike feeling flat. Procedural content is rarely aesthetically pleasing, so roguelikes rely on creating interesting mechanical space; typically through risk/reward dynamics. The ability to take back mistakes softens the risk, and makes the mechanical space less exciting.

It isn't possible, by definition, to abuse a 1 player game. At times it is possible for player ingenuity to improve on a designer's intent.
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psrNov 16 '12 at 1:17

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@psr - even thought the game is single player on any one person's machine, it is played by many people and their experiences can be compared, just as if they were in the same game world. For that reason, it is certainly reasonable to consider abuse.
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KylotanNov 16 '12 at 8:54

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I disagree strongly. Permadeath I think encourages grinding more. People often stay at levels far lower than they normally otherwise would, trying to level up...they always want to be far ahead of the challenge curve, because the occasional and inevitable surprise is less likely to have the ultimate penalty.
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BeskaNov 16 '12 at 13:21

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It might be silly to you, but there are many people for whom it's not silly. People spent a lot of money in arcades in the 80s trying to get the high scores, to beat players they had never met and who had never played in the same game session as themselves. For many, the meta-game is an integral part of the game.
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KylotanNov 16 '12 at 21:33

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The internet is a mechanism of interaction, as is the mere ability to talk to people. Interactions outside of the experience count for many.
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KylotanNov 19 '12 at 10:32

"But would people see it as a FPS? Probably not." Probably because it's not a shooter anymore. You're not shooting people if you're using swords. FPS does not mean "any first-person game"; it means "first person shooter".
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Nicol BolasNov 17 '12 at 7:01

One of the major game-mechanical aspects of classic roguelikes such as Nethack is that you don't know what the potions, scrolls, and wands that you collect do until you try them (and sometimes not even then). There's therefore a big element of risk - is this potion poison or healing? Is this scroll Enchant Armor or Destroy Armor? Any "undo" or save-restore backtrack ability undermines this, and you'd lose the desperate "I'm gonna die on the next turn but maybe this last scroll will turn out to be Teleportation" moments that make roguelikes extra-exciting.

I think one of the core concepts of roguelike games is the inherent humor of your history of failure.

For some people it is fun to look back and realize which decisions ultimately lead to their doom, "decisions" you often were not really at liberty to make at all.
All this in a world that constantly tries to kill you with almost no knowledge about it.
Also, a lot of these games are incredibly and deliberately unfair: There might be a high-leveled Lich behind the next door, even on the top level. That way every decision has unforeseeable consequences.

So in the end these games create a tragic hero whose doom is pretty much predetermined and the only question is: How?
This inability to escape the forces that be might also be a sarcastic comment on life itself - and that's the humor in it.

You can have perfectly functional gameplay without permadeath, while still allowing ability-based character progression and procedurally-generated worlds. Terraria's a good example of this.

What you've done is broken down the Roguealike "genre" too far. You've stripped out important elements.

Consider this. If you want the player to see your procedural engine, to really make use of it, does permanent death help. Yes... provisionally. That provision being that the player die. A lot. Permadeath in a game where death is not common doesn't aid seeing more procedural worlds at all.

Therefore, in order for "Procedurally generated worlds" and "Permadeath" to synergize, you need a third element: killing the player a lot. Roguealikes tend to employ methods to kill players that would generally be seen as brutally unfair ("here's a potion, but I'm not going to tell you what it does. It might kill you or save you. Drink it to find out.").

So the reason why you don't see the connection between the elements is because you're missing elements essential to the genre. You need to combine "permadeath" with "dies a lot" before it starts to connect with "procedural world generation".

+1. But to be fair, most of the newer roguelike games (say, from NetHack onward) provide lots of ways to determine what a potion is before you drink it. And discovering those non-tutorialised game rules is really the core activity of a modern roguelike game.
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Trevor PowellNov 17 '12 at 8:28